Performing preventive maintenance (PM) on an interval basis (time, cycles, etc) is widely recognized as fundamental to improving maintenance effectiveness, and a path to improving equipment reliability. We believe that maintenance should be considered a reliability function, rather than a repair function. The need for improved reliability has received increasing priority in light of recent US regulations such as OSHA 1910, section 119j, which requires a mechanical integrity program at plants that deal with hazardous materials.
Optimizing the PM process presumes that you have PMs to optimize. Therefore, you should have completed your computer based maintenance management database including:
- All critical equipment: items that constrain or stop production, or create a safety hazard.
- All appropriate PMs and related procedures, overhaul, or turnaround procedures.
- A complete equipment database, including a bill of materials for spares for critical equipment.
- A process for managing work orders, including planning and scheduling, Pareto and cost analysis, equipment specific histories, etc.
If not, or even if not fully developed, you can still get a preventive maintenance program started - more on that to come.
Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence best practices. We are no longer providing on-site consultations, and are unable to engage new clients. To pose a question, post a best practice, or otherwise contribute to the dialogue send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.
Saturday, September 29, 2007
Friday, September 28, 2007
Product Mix Optimization
It seems that in every manufacturing enterprise the focus - sooner or later - comes to rationalizing the product line. "We have too many SKUs!" Sometimes SKUs are only slightly different, and the more products in a company the more complex accounting, warehousing, and even manufacturing can be. When it is time to assess your product line, we propose the following possibilities:
- Consolidate products with similar characteristics, with a focus on offering the higher value product.
- Subcontracting or otherwise outsourcing production for some small orders to companies that are more suited to small quantities, then increase product pricing such that the product remains profitable. This gives an indication of true market prices and production costs.
- Another way to optimize small-order production products is to set up a dedicated in-house production line that makes nothing other than make small-order products.
- Very selectively take products that have no margin or strategic value, and transferring those products to a competitor - with the cooperation of the customer - to maintain the relationship with the customer.
- Press to develop better forecasts for small-order products, then make large quantities of those products in anticipation of future orders. Since these products are generally small orders, even making a 10x historical quantity, may not have a significant impact on inventory costs or turns. This may not be practical for products with shelf-life or obsolescence concerns.
- Negotiate longer lead times with customers for small-order products so orders can be consolidated, allowing for better production planning.
- Explore faster changeover methods, and train operators to implement them. For all equipment, develop a commissioning and reliability work process.
Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence best practices. We are no longer providing on-site consultations, and are unable to engage new clients. To pose a question, post a best practice, or otherwise contribute to the dialogue send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.
- Consolidate products with similar characteristics, with a focus on offering the higher value product.
- Subcontracting or otherwise outsourcing production for some small orders to companies that are more suited to small quantities, then increase product pricing such that the product remains profitable. This gives an indication of true market prices and production costs.
- Another way to optimize small-order production products is to set up a dedicated in-house production line that makes nothing other than make small-order products.
- Very selectively take products that have no margin or strategic value, and transferring those products to a competitor - with the cooperation of the customer - to maintain the relationship with the customer.
- Press to develop better forecasts for small-order products, then make large quantities of those products in anticipation of future orders. Since these products are generally small orders, even making a 10x historical quantity, may not have a significant impact on inventory costs or turns. This may not be practical for products with shelf-life or obsolescence concerns.
- Negotiate longer lead times with customers for small-order products so orders can be consolidated, allowing for better production planning.
- Explore faster changeover methods, and train operators to implement them. For all equipment, develop a commissioning and reliability work process.
Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence best practices. We are no longer providing on-site consultations, and are unable to engage new clients. To pose a question, post a best practice, or otherwise contribute to the dialogue send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.
Thursday, September 27, 2007
Plant Design and Capital Project Best Practices
We have written on this subject, many times. For this entry let's focus on design objectives. Every great project engineer will tell you that any project begins with defining your design objectives. In our view, a great design objective list includes reliability and maintainability objectives. We also think that a great installation effort includes a process for verifying the quality of the installation - much more and beyond typical verification of process capability at start up.
There is much, much more to plant design and world-class manufacturing than process flows, process chemistry, and standard design methods. These are all important, but a project manager must stay focused on the fact that all of these issues are equally important.
Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence best practices. We are no longer providing on-site consultations, and are unable to engage new clients. To pose a question, post a best practice, or otherwise contribute to the dialogue send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.
There is much, much more to plant design and world-class manufacturing than process flows, process chemistry, and standard design methods. These are all important, but a project manager must stay focused on the fact that all of these issues are equally important.
Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence best practices. We are no longer providing on-site consultations, and are unable to engage new clients. To pose a question, post a best practice, or otherwise contribute to the dialogue send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.
Wednesday, September 26, 2007
Production Planning - Can we really do it?
Production planning (in a non class A environment) can be chaotic, and subject to the whims of marketing - or more accurately sales. Integrating sales and manufacturing strategies, and we always advocate rationalizing product mix can help a lot. There are some actions manufacturing plants can take to facilitate the manufacturing-sales-marketing integration process:
- Document a sales and production planning procedure, including forecasting, supply/demand balancing, verification of production forecast vs demonstrated plant performance, conformance to production plan, etc.
- Refinement of a sales and production forecasting system.
- Balancing of supply, demand, and inventory levels.
- Planning raw material demand as a result of these reviews.
- Linking current performance to business financials.
- Creation of a longer term logistics requirements plan.
- Creation of a process for resolving conflicts in the supply chain.
- Linking to supplier and customer information systems for planning purposes.
- Fully integrating production planning, and maintenance planning functions.
- Comprehensive training of production planners in planning systems, integrated logistics, and supply chain issues.
Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence best practices. We are no longer providing on-site consultations, and are unable to engage new clients. To pose a question, post a best practice, or otherwise contribute to the dialogue send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.
- Document a sales and production planning procedure, including forecasting, supply/demand balancing, verification of production forecast vs demonstrated plant performance, conformance to production plan, etc.
- Refinement of a sales and production forecasting system.
- Balancing of supply, demand, and inventory levels.
- Planning raw material demand as a result of these reviews.
- Linking current performance to business financials.
- Creation of a longer term logistics requirements plan.
- Creation of a process for resolving conflicts in the supply chain.
- Linking to supplier and customer information systems for planning purposes.
- Fully integrating production planning, and maintenance planning functions.
- Comprehensive training of production planners in planning systems, integrated logistics, and supply chain issues.
Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence best practices. We are no longer providing on-site consultations, and are unable to engage new clients. To pose a question, post a best practice, or otherwise contribute to the dialogue send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.
Tuesday, September 25, 2007
Leadership Model - The Very Best!
Some business school references say that the most effective leaders build enduring greatness through a combination of personal humility and fierce professional resolve. Great leaders attend to people first, and manufacturing strategy second. Great leaders recognize that the good to great transformation takes time.
Another characteristic of a great leader is that they expect a very disciplined operating culture: disciplined people who require less hierarchy; disciplined thought which requires less bureaucracy; and disciplined actions, which requires fewer controls.
Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence best practices. We are no longer providing on-site consultations, and are unable to engage new clients. To pose a question, post a best practice, or otherwise contribute to the dialogue send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.
Another characteristic of a great leader is that they expect a very disciplined operating culture: disciplined people who require less hierarchy; disciplined thought which requires less bureaucracy; and disciplined actions, which requires fewer controls.
Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence best practices. We are no longer providing on-site consultations, and are unable to engage new clients. To pose a question, post a best practice, or otherwise contribute to the dialogue send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.
Monday, September 24, 2007
Tailored Transportation
Tailored transportation is the use of different transportation modes and networks based on product and customer characteristics. Most firms sell a variety of products and serve many different customer segments. A firm that sells office supplies and furniture will have a very different tailored transportation strategy than a firm that sells bulk oil products.
A firm can meet customer needs at a lower cost by using tailored transportation to provide the appropriate transportation choice based on customer and product characteristics. There are numerous forms of tailored transportation in supply chains, including tailored transportation by customer density and distance, tailored transportation by size of customer, and tailored transportation by product demand and value. For example, tailored transportation based on customer density and distance can look like this:
Short Distance:
High density - private fleet with milk runs
Medium density - third party milk runs
Low density - third party milk runs or LTL carrier
Medium distance:
High density - cross dock with milk runs
Medium density - LTL carrier
Low density - LTL or package carrier
Long distance:
High density - cross dock with milk runs
Medium density - LTL or package carrier
Low density - package carrier
The key point is that tailoring transportation based on customer density and distance, customer size, or product demand and value allows a supply chain to achieve appropriate responsiveness and cost.
Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence best practices. We are no longer providing on-site consultations, and are unable to engage new clients. To pose a question, post a best practice, or otherwise contribute to the dialogue send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.
A firm can meet customer needs at a lower cost by using tailored transportation to provide the appropriate transportation choice based on customer and product characteristics. There are numerous forms of tailored transportation in supply chains, including tailored transportation by customer density and distance, tailored transportation by size of customer, and tailored transportation by product demand and value. For example, tailored transportation based on customer density and distance can look like this:
Short Distance:
High density - private fleet with milk runs
Medium density - third party milk runs
Low density - third party milk runs or LTL carrier
Medium distance:
High density - cross dock with milk runs
Medium density - LTL carrier
Low density - LTL or package carrier
Long distance:
High density - cross dock with milk runs
Medium density - LTL or package carrier
Low density - package carrier
The key point is that tailoring transportation based on customer density and distance, customer size, or product demand and value allows a supply chain to achieve appropriate responsiveness and cost.
Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence best practices. We are no longer providing on-site consultations, and are unable to engage new clients. To pose a question, post a best practice, or otherwise contribute to the dialogue send a note to RobBaldwin@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Webmaster@SynchronousLLC.com with SUBSCRIBE in the subject line.
Sunday, September 23, 2007
Demand Forecasting Methods
There are as many demand forecasting methods as there are companies doing demand forecasting. We think that is great, a company that is working to develop and implement an effective demand planning work process should take on an appropriate demand forecasting methodology and "tweak" it to make it effective for them. Different companies have different factors that influence demand - seasonality, interest rates, demographics, etc. There are however, four basic methods of forecasting customer demand:
- Qualitative forecasts, which are subjective and typically rely on human judgement and opinions to make a forecast. This method is appropriate when there is little or no historical data available, or when experts have market intelligence that is critical to making a forecast.
- Time series forecasting methods use historical demand to make a forecast. These are typically based on the assumption that past demand history is a good indicator of future demand. Time series forecasts are appropriate when the economic environment is stable, and the pattern of basic demand does not vary significantly from one year to the next. This is the simplest method to implement and can serve as a good starting point for a demand forecast.
- Casual forecasting methods involve assuming demand patterns correlate highly with certain factors in the economic environment, the state of the economy, interest rates, etc. For example, if product pricing is strongly correlated with demand, a company can use casual methods to determine the impact of price promotions on demand.
- Simulation forecasting methods attempt to imitate the customer choices that give rise to demand to arrive at an accurate demand forecast. Using simulation methods, a company can combine time series and casual methods, as well as specific customer input from sales and marketing.
A company may find it difficult to decide which method is most appropriate for forecasting demand. In fact, using multiple forecasting methods, and then using the combination of their forecasts as the actual forecast is usually the best method. That is why we advocate customizing a demand planning process to fit every unique client.
Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence best practices. We are no longer providing on-site consultations, and are unable to engage new clients. To pose a question, post a best practice, or otherwise contribute to the dialogue send a note to webmaster@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Sales@SynchronousLLC.com with SUBSCRIBE in the subject line.
- Qualitative forecasts, which are subjective and typically rely on human judgement and opinions to make a forecast. This method is appropriate when there is little or no historical data available, or when experts have market intelligence that is critical to making a forecast.
- Time series forecasting methods use historical demand to make a forecast. These are typically based on the assumption that past demand history is a good indicator of future demand. Time series forecasts are appropriate when the economic environment is stable, and the pattern of basic demand does not vary significantly from one year to the next. This is the simplest method to implement and can serve as a good starting point for a demand forecast.
- Casual forecasting methods involve assuming demand patterns correlate highly with certain factors in the economic environment, the state of the economy, interest rates, etc. For example, if product pricing is strongly correlated with demand, a company can use casual methods to determine the impact of price promotions on demand.
- Simulation forecasting methods attempt to imitate the customer choices that give rise to demand to arrive at an accurate demand forecast. Using simulation methods, a company can combine time series and casual methods, as well as specific customer input from sales and marketing.
A company may find it difficult to decide which method is most appropriate for forecasting demand. In fact, using multiple forecasting methods, and then using the combination of their forecasts as the actual forecast is usually the best method. That is why we advocate customizing a demand planning process to fit every unique client.
Synchronous LLC is committed to maintaining a continuing dialogue on operational excellence best practices. We are no longer providing on-site consultations, and are unable to engage new clients. To pose a question, post a best practice, or otherwise contribute to the dialogue send a note to webmaster@SynchronousLLC.com . To subscribe to our weekly newsletter send your preferred email contact address to Sales@SynchronousLLC.com with SUBSCRIBE in the subject line.
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